New Mexico Personal Representative Bond: A Comprehensive Guide
October 5, 2022
This guide provides information for insurance agents to help their customers obtain a New Mexico Personal Representative bond.
At a Glance:
- Average Cost: Calculated based on a tiered structure
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs it: Most personal representatives handling the estates of deceased New Mexico residents or property owners
- Purpose: To ensure estate beneficiaries and creditors receive compensation if the personal representative mishandles the estate’s assets
- Who Regulates Personal Representatives in New Mexico: The county court with jurisdiction over where the deceased individual resided or had property
New Mexico Statute 45-3-601 requires all personal representatives of an estate to be appointed by a court before assuming their fiduciary duties. The New Mexico legislature enacted the appointment requirement to ensure that personal representatives do not mismanage the estate’s assets. To provide financial security for the enforcement of this requirement, the court may require a personal representative to purchase and maintain a probate surety bond to be eligible for appointment.
What is the Purpose of the New Mexico Personal Representative Bond?
New Mexico requires personal representatives to purchase a surety bond as a prerequisite to being appointed as a fiduciary over an estate’s assets. The bond ensures that the estate’s beneficiaries and creditors will receive compensation for financial harm if the personal representative fails to abide by the regulations outlined in New Mexico Statute 45-3-606. Specifically, the bond protects beneficiaries and creditors if the personal representative mismanages the estate’s assets. In short, the bond is a type of insurance that protects the estate’s beneficiaries and creditors if the personal representative violates their fiduciary duties.
How Can an Insurance Agent Obtain a New Mexico Personal Representative Surety Bond?
BondExchange makes obtaining a New Mexico Personal Representative bond easy. Simply login to your account and use our keyword search to find the “Probate” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
New Mexico Statute 45-3-604 dictates that, unless the bond amount is specified in the will, the bond must be equal to the personal representative’s estimated value of the personal estate as well as the estimated income the estate’s real and personal property will generate in the next year.
The court may reduce the required bond amount by the value of all estate assets held in a domestic financial institution. Additionally, the court may increase the bond amount if any person interested in the estate petitions them to do so.
What are the Underwriting Requirements for the New Mexico Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the New Mexico Personal Representative bond:
- Personal representative’s credit history (not considered for bonds with limits less than $25,000)
- Whether or not the estate has an attorney (not considered for bonds with limits less than $25,000)
- How long the fiduciary appointment is for
- Whether or not the personal representative is replacing a prior fiduciary
- If the personal representative has ever committed a felony
- If there are disputes among the estate’s beneficiaries
- Whether or not there is any ongoing business in the estate
- If the bond is being required by a creditor
How Much Does the New Mexico Personal Representative Bond Cost?
Surety companies typically determine the premium rate for personal representative bonds based on a tiered structure. As a result, larger bond amounts will be charged a lower premium rate than smaller bonds.
The following table illustrates the pricing structure for the New Mexico Personal Representative bond:
$1,500,000 Personal Representative Bond Cost
|Bond Amount||Premium Rate||Total Bond Cost|
|Total cost of $4,715|
Who is Required to Purchase the New Mexico Personal Representative Bond?
New Mexico requires personal representatives to purchase a surety bond as a prerequisite to obtaining a fiduciary appointment. To paraphrase New Mexico Statute 45-1-201, a personal representative is a court-appointed fiduciary responsible for administering a deceased individual’s estate. Personal representatives are referred to as executors if the deceased individual nominated them in their will, or administrators if they were not nominated in the will or if no will exists.
Personal representatives are not required to purchase a bond if:
- The court deems one unnecessary
- The will explicitly waives the bond requirement
- They have deposited cash or other collateral with a New Mexico agency
- There is an informal estate administration proceeding, unless:
- A special administrator has been appointed
- The will expressly requires the bond
Any interested person may petition the court to require an exempt personal representative to purchase a bond.
How do Personal Representatives Become Appointed in New Mexico?
Personal representatives in New Mexico must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to New Mexico’s uniform probate code for details on the process.
Step 1 – Determine Priority
Priority to serve as a personal representative shall be granted in the following order:
- Persons nominated in the will
- The surviving spouse, provided that they are entitled to the estate’s assets
- Any other person entitled to the estate’s assets
- The surviving spouse if they are not entitled to any assets
- Any other next of kin not entitled to the estate’s assets
- After 45 days, any creditor
Step 2 – Determine the Estate Administration Type
- Informal Probate: The will explicitly named an executor and the court is not actively supervising their administration of the estate
- Informal Appointment: The will did not explicitly name an executor, therefore the court must appoint an administrator as a personal representative. The court does not actively supervise the administrator for informal appointments
- Formal Testacy: The will explicitly named an executor and the court will hold a hearing to validate the will and. The court will closely monitor the personal representative’s administration activities.
- Formal Appointment: The will did not name an executor and the court will hold a hearing to validate the will and appoint a personal representative. Once the personal representative is appointed, the court will closely monitor their administration activities.
Any interested person may petition the court to start formal testacy or appointment proceedings.
Step 3 – Hire an Attorney
Although not explicitly required, it is highly recommended that personal representatives hire an attorney to assist with the probate process.
Step 4 – Contact the Court
Personal representatives must contact the county court with jurisdiction over the deceased individual’s estate. A representative of the court will walk the personal representative through the appointment process, provide them with all required forms, and answer any questions they may have. Depending on the estate administration type, a hearing may be required before the personal representative is appointed.
Step 5 – Purchase a Surety Bond
Unless otherwise exempt, personal representatives must purchase and maintain a surety bond (limits outlined above).
How do New Mexico Personal Representatives File Their Bonds?
Personal representatives should submit their completed bond forms, including the power of attorney, to the district court of the county with jurisdiction over the estate.
The surety bond requires signatures from the company that issues the bond and the personal representative. The surety company should include the following information on the bond form:
- Court where the bond is to be filed
- Name of deceased individual
- Legal name of the entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
- Date the fiduciary appointment was made
What can New Mexico Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in New Mexico must ensure that they:
- Do not mismanage the estate’s assets
- Fulfill their fiduciary duties